Friday, December 21, 2007

Stocks for Christmas week

This is my first post on Blogspot. It looks like 360.yahoo.com is going through a sea change, and I have had some trouble getting technical support to answer my questions. So let my try some posts here and see how the blogs compare. I will cross post on my old blog as well.

Here are the stocks from the weekly list that passed at least three filters.

IBD is now saying the rally is under pressure. Now that's more like it! I have noticed IBD's asymmetry when it comes to declaring a market bullish or bearish: it seems hard to get them to say the market is falling, and they switch quickly to the rally side. I wonder when they will stop calling a rally after a fall a follow-through day and start calling it a sucker's rally.

Mike R. sent me an article entitled "The Blow-up Artist," by John Cassidy in The New Yorker (October 15, 2007). Great story about Victor Niederhoffer, a famed speculator who had a dramatic undoing in 1997. He had an equally dramatic comeback. But judging by the emotional tone and his bias toward believing in a bullish market, he is in serious trouble now.

Taleb had something to say about Niederhoffer.Niederhoffer's publicized hiccup came from his selling naked options based on his testing and assuming that what he saw in the past was an exact generalization about what could happen in the future. He relied on the statement "The market has never done this before," so he sold puts that made a small income if the statement was true and lost hugely in the event of it turning out to be wrong. When he blew up, close to a couple of decades of performance were overshadowed by a single event that only lasted a few minutes.

(Nassim Taleb, Fooled by Randomness p. 120)

I bought some CLB based on one of my favorite technical indicators. Note that it hit one of the local minima in late November (28Nov) and tested the low again on 18 Dec. However, the MACD rose from a bottom to a higher point. That is a classic bullish divergence.

Development on the lot continues unabated. We hit rock but were given a go-ahead by a soil engineer. You can read about it at chackobuild.blogspot.com